* CITY CHICO City Council Agenda Report

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1 * CITY CHICO City Council Agenda Report Meeting Date: November 7, 2017 TO. Honorable Mayor and City Council FROM: City Manager ( ) RE: Consideration of an Ordinance Reauthorizing Chico Municipal Code Chapter 5.13, Franchises - Digital Infrastructure and Video Competition Act of 2006 and adding Section Entitled Reauthorization REPORT IN BRIEF: On December 18, 2007, the City Council adopted Ordinance No which established, among other things, a public, educational and governmental (PEG) support fee of one percent (1%) of the gross revenues of state video franchisees operating within the City of Chico which is codified in Chico Municipal Code Title 5, Chapter 5.13, Section California Public Utilities Code Section 5870(n) was enacted as part of the Digital Infrastructure and Video Competition Act of 2006 (DIVCA) and states that such an ordinance shall expire, and may be reauthorized, upon the expiration of a state franchise. Comcast is currently the only state video franchisee operating within the city of Chico and has a state video franchise certificate which will be expiring on January 2, To ensure that there is no gap in the payment of PEG support fees, the City Council is being asked to reauthorize the City's PEG support fee and amend Title 5, Chapter 5.13 to include automatic reauthorization of the PEG support fee. Recommendation: The City Manager recommends that the City Council introduce the ordinance below by reading of its title only. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHICO REAUTHORIZING CHICO MUNICIPAL CODE CHAPTERS.13, FRANCHISES - DIGITAL INFRASTRUCTURE AND VIDEO COMPETITION ACT OF 2006, AND ADDING SECTION ENTITLED REAUTHORIZATION- Introductory reading FISCAL IMPACT: The ordinance will reauthorize the existing one percent (1%) public, educational and governmental (PEG) access support fee imposed in Chico Municipal Code (CMC) Section In fiscal year the fee resulted in revenue in the amount of $183,304. It should be noted that this ordinance is not imposing a new or increased fee but rather is reauthorizing an already existing PEG support fee at the same level to the extent such reauthorization may be needed to collect said fee. BACKGROUND: In 2006 the California State Legislature enacted AB 2987, the Digital Infrastructure and Video Competition Act of 2006 (DIVCA) which eliminated the City's video franchising authority and established the State Public Utilities Commission as the sole video franchising authority. While DIVCA mandates that the franchise fee payable to a city by a state video franchisee shall be five percent (5%) of gross revenues, California Public Utilities Code Section 5870(n), enacted as part of DIVCA, authorized the City to also adopt an ordinance establishing a fee on state video franchisees to support PEG channel facilities and access. On December 18, 2007, the City adopted Ordinance No establishing, among other things, a PEG support fee of one percent (1%) of gross revenues, which is codified in Chico Municipal Code Title 5, Chapter 5.13, Section California Public Utilities Code Section 5870(n) states that such an ordinance shall expire, and may be reauthorized, upon the expiration of a state franchise.

2 RE Ordinance Reauthorizing Chico Municipal Code Chapter 5.13 Meeting Date: November 7, 2017 Page 2 of 2 DISCUSSION: There are currently two California Video Franchise Certificates that list the city of Chico as an affected local entity: 1) California Video Franchise Certificate, Franchise No granted to Pacific Bell Telephone Company d/b/a SBC Pacific Bell Telephone Company d/b/a AT&T California ("AT&T"), expired on March 30, 2017, and was renewed through March 30,2027; and 2) California Video Franchise Certificate, Franchise No granted to Comcast Cable Communications Management, LLC d/b/a/ Comcast, which will be expiring on January 2,2018 Of these two state video franchisees, Comcast is the one currently operating within the City. AT&T decided not to expand its U-Verse video service within Chico due to its purchase of DirectTV. The revenue from the PEG support fee is allocated in the city's budget to support the operations of BCAC TV Channel 11, through a Public, Education and Governmental Access Channel Operations agreement with Upstate Community Enhancement Foundation (UCEF) (Project No / ) as well as for the equipment and capital costs associated with the broadcasting of city governmental programming such as City Council meetings. To ensure that there is no gap in the payment of PEG support fees due to the upcoming expiration of Comcast's existing video franchise certificate, or the expiration of a video franchise certificate issued to any future state video franchisee operating within the City, the City Council is being asked to reauthorize Chico Municipal Code Chapter 5.13, Franchises - Digital Infrastructure and Video Competition Act of 2006 and add Section entitled Reauthorization to include automatic reauthorization of the PEG support fee. Prepared by: D latfy'10»0 Deborah M. Collins, Management Analyst Approved and Recommended by: MBJGIXU Mark Orme, City Manager DISTRIBUTION: City Clerk (3) ATTACHMENTS: Exhibit "A" - Ordinance Reauthorizing PEG Support Fees Exhibit "B" - Proposed Chico Municipal Code Chapter 5.13 FILE: L-FRAN

3 ORDINANCE NO. 2 (Codified) ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHICO REAUTHORTZING CHICO MUNICIPAL CODE CHAPTER 5.13, FRANCHISES - DIGITAL INFRASTRUCTURE AND VIDEO COMPETITION ACT OF 2006, AND ADDING SECTION ENTITLED REAUTHORIZATION WHEREAS, the California State Legislature passed the Digital Infrastructure and Video Competition Act of 2006 (the "Act") which eliminated the City's video franchjsing authority and provides that all franchises for video services shall be statewide franchises issued by the California Public Utilities Commission; and WHEREAS, California Public Utilities Code Section 5870(n), enacted as part of the Act, authorized the City to adopt an ordinance establishing a fee on state franchised video service providers to support public, educational and governmental (PEG) channel facilities and access; and WHEREAS, on December 18, 2007, the City adopted Ordinance No which established, among other things, a PEG support fee, which is codified in Chico Municipal Code (CMC), Title 5, Chapter 5.13, Section ; and WHEREAS, California Public Utilities Code Section 5870(n) states that such an ordinance shall expire, and may be reauthorized, upon the expiration of a state franchise; and WHEREAS, California Video Franchise Certificate Franchise No granted to Pacific Bell Telephone Company d/b/a SBC Pacific Bell Telephone Company d/b/a AT&T California ("AT&T"), expired on March 30,2017, and was renewed through March 30,2027; and WHEREAS, California Video Franchise Certificate Franchise No granted to Comcast Cable Communications Management, LLC d/wa/ Comcast, will expire on January 2,2018; and WHEREAS, the City desires to ensure that there is no gap in the payment of PEG support fees due to the expiration of any existing or future video franchise certificate held by any state video franchisee operating within the City of Chico. NOW, THEREFORE, BE lt ORDAINED by the Council of the City of Chico: SECTION 1. REAUTHORIZATION. The City's PEG support fee imposed in CMC Section is hereby reauthorized to the extent required by California Public Utilities Code Page 1 of 2 EXHIBIT "A"

4 Section 5870(n) which fee shall remain unchanged and in full effect as to all state franchised video service providers operating within the city. SECTION 2. AMENDMENT. CMC Chapter 5.13 is hereby amended to add Section entitled "Reauthorization" to read as follows: Reauthorization. This Chapter. and the PEG support fee established in Section shall automatically be reauthorized upon the expiration and renewal of any existing or future state video franchise certificate held by any state franchisee operating within the city of Chico pursuant to the terms of Public Utilities Code Section 5870(nl. SECTION 3. SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase or portion of this ordinance or the application thereof is for any reason held to be invalid or unconstitutional by the final decision of any court of competent jurisdiction, the remainder of this ordinance shall remain in full force and effect. SECTION 4. PUBLICATION. This ordinance shall be published as provided in Government Code section SECTION 5. EFFECTIVE DATE. This ordinance shall be effective upon the commencement of the thirty-first day following adoption THE FOREGOING ORDINANCE was adopted by the City Council of the City of Chico at its meeting held on, 2017, by the following vote: AYES: NOES: ABSENT: ABSTAIN: DISQUALIFIED: ATTEST: APPROVED AS TO FORM: Deborah R. Presson, City Clerk Vincen.Ewing, City Attorney* *Pursuant to The Charter of the City of Chico, Section 906(E) Page 2 of2 EXHIBIT "A"

5 Chapter 5.13 FRANCHISES - DIGITAL INFRASTRUCTURE AND VIDEO Section: COMPETITION ACT OF Purpose and applicability Definitions Franchise fee Public, educational and government (PEG) channels PEG support fee Customer services regulations - penalties for violations Reauthorization Purpose and applicability This chapter shall apply to all holders of a franchise issued pursuant to the Digital Infrastructure and Video Competition Act of 2006, found at Public Utilities Code section 5810 et seq Definitions. When used in this Chapter, the following terms shall have the meanings set forth below. A. Act. "Act" shall refer to the Digital Infrastructure and Video Competition Act of 2006, found at Public Utilities Code section 5810 et seq. B. Franchisee. "Franchisee" shall mean any person or entity holding a franchise issued pursuant to the Act and pursuant to which the franchisee provides video services within the City of Chico (BO Franchise fee. A. The franchise fee payable to the City by a franchisee shall be five percent (5%) of gross revenues, as the term 'gross revenues" is defined by the Act. B. Franchisees shall retain all records reflecting any gross revenues for at least four years. City or its agent may, not more than once annually, examine those records to the extent reasonably necessary to ensure compliance with this section. The costs of such examination shall be paid by Franchisee ifthe examination establishes an underpayment of franchise fees by more than fi ve percent Public, educational and government (PEG) channels. Each franchisee shall designate three PEG channels. The PEG channels shall be provided for use pursuant to the provisions for PEG channels set forth in the Act PEG support fee. Each franchisee shall pay a PEG support fee to support PEG channel facilities of one percent (1%) of gross revenues. Use of the PEG fees shall be consistent with applicable state and federal law Customer service regulations - penalties for violations. EXHIBIT "B"

6 Franchisees shall comply with the provisions of section ofthe Penal Code and the privacy standards contained in Section 631 of the federal Cable Act. (47 U.S.C. section 551 et seq.) Franchisees shall also comply with all customer service standards referenced in section 5900 ofthe Act. The City will enforce, in the manner set forth in section 5900 of the Act, all such customer service standards. The following schedule of penalties is hereby established for any material breach ofapplicable customer standards including, but not limited to, section 5900 of the Act, by a franchisee: (a) Five hundred dollars ($500) per day for each material breach, not to exceed one thousand five hundred dollars ($1,500) for occurrence ofa material breach. (b) Ifa material breach has occurred and the City has provided notice and a fine or penalty has been assessed, any subsequent breach of the same nature within twelve (12) months, shall be subject to a penalty of up to one thousand dollars ($1,000) for each day ofeach material breach, not to exceed three thousand dollars ($3,000) for each occurrence of the material breach. (c) 1 f a third or further material breach of the same nature occurs within those same twelve (12) months, and the City has provided notice and a fine or penalty has been assessed; the penalties shall be increased to a maximum oftwo thousand five hundred dollars ($2,500) for each occurrence of the material breach, not to exceed seven thousand five hundred dollars ($7,500) for each occurrence of the material breach Reauthorization. This Chapter. and the PEG support fee established in Section shall automatically be reauthorized upon the expiration and renewal of any existing or future state video franchise certificate held bv anv state franchisee operating within the citv of Chico pursuant to the terms of Public Utilities Code Section 5870(n). (Ord. 2368) EXHIBIT "B"